In Markets

After its big weekend plunge, Bitcoin has been trundling along mostly below AU$70K/US$50K until today when it poked its head above. It’s still down 12.6% for the week and is trading at just above AU$72,100 (US$50.9K). Ethereum has performed considerably better and is now just 2.4% on this time last week to trade around AU$6,150. Everything else was down including Cardano (-10.7%), Ripple (-16.6%) and Dogecoin (-17.5%). The Crypto Fear and Greed Index is at 16, or Extreme Fear, the lowest reading since July.


From the IR OTC Desk

US Fed Governor Powell has told a US Senate Banking Committee that it is time to retire the word ‘transitory’ when referencing inflation. Transitory has previously been used by the Fed to describe the effects on pricing from supply-chain bottlenecks. Additionally, Chair Powell mentioned that it may be appropriate to consider wrapping up the Bank’s QE taper a few months sooner (than a linear pathway of a 15bn reduction to purchases per month). Futures markets currently have the first full rate hike priced by June 2022. Any further guidance on this pathway or additional detail on Omicron should prove important.

Today, we have the final Reserve Bank of Australia (RBA) meeting for the calendar year. While the market is expecting very little change in rhetoric, any additional information on Omicron, inflation forecasting, the labour market, and asset purchase tapering will be closely followed. It is important to note that the RBA doesn’t convene in January, with their next scheduled meeting being the 1st February 2022 – the likely date the Bank will officially review their asset purchase framework. Currently, the short-term interest rate market is forecasting the first rate hike by the RBA to be in May 2022. Well before the Bank’s guidance of early 2024.

On the OTC desk, sell side flow continues to be the dominant theme. BTC is now trading slightly above its calendar year average: ETH/BTC has reached highs on the week not seen since February 2018. Interest in layer 1 now looks to have moved on to Luna – which appears to be stealing TVL from both ETH and AVAX. We continue to see very good buy side flow in Doge.

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In Headlines

Independent Reserve partners with the Sydney Swans

Independent Reserve is proud to be the Official Cryptocurrency Exchange of the Sydney Swans. We look forward to bringing together the world of crypto with the Sydney Swans members and fans. As part of the partnership, Independent Reserve will be involved in match day activations at Sydney Swans home games, digital activations across the club’s online channels, and also engage with the new Sydney Network, the club’s business, and stakeholder network.

Saturday’s plunge

Every so often crypto takes a massive dive, and that’s what happened on Saturday when the price plunged from AU$75K down to AU$64K in about an hour (an astonishing candle on Huobi Global saw it touch AU$41K/US$28.8K.) Around AU$2.54B (US$1.79B) worth of BTC longs were liquidated in a single hour and Glassnode reported that total futures open interest declined by 24.5% over the day. The total crypto market cap plunged from AU$3.75T to around AU$3T in the space of a day. Fingers were pointed at culprits including the Omicron variant and the Federal Reserve’s tapering of bond purchases. Veteran trader Peter Brandt meanwhile thinks the crash was engineered, pointing to significantly lower selling volume than during May’s crash. “We have not seen the type of panic selling volume that characterizes market bottoms. Not that such volume spikes are necessary, but to date, the volume profile more resembles a bear trend engineered by big operators,” he tweeted.

Big jump in Aussies owning crypto

The proportion of Australians owning crypto has surged from 18.4% last year to 28.8% this year according to the third annual Independent Reserve Cryptocurrency Index (IRCI). The proportion of women also doubled to 20%. Almost nine in ten crypto owners have either made money or broke even with their investments. Bitcoin remains the most well-known and popular cryptocurrency, with 89.1% of Australians saying they’ve heard of it and 21.1% actually owning Bitcoin. The second most popular is Ethereum, at 11% (up from 5% ownership in 2020).

IRCI stat

Bear market?

So are we on the cusp of a four year bear market? Not according to pundits like Will Clemente and Willy Woo who increasingly take the view such cycles are a thing of the past as Bitcoin is embraced by the mainstream. “Could very well see rounded tops/bottoms from now on,” Clemente tweeted. Woo says that we’re “currently trading on a decent discount” pointing to Bitcoin’s Supply Shock Valuation Chart. IntoTheBlock notes that cryptocurrencies have historically averaged a 38% gain in the month of December, while Bitcoin had gained an average of 21%.

BTC supply shock


Ether crashes but less so

Ethereum plunged along with everything else but still managed to hit a three year high against Bitcoin. The ETH/BTC exchange rate jumped 11.5% to hit 0.0835 BTC for the first time since May 2018. “It seems that investors are taking ETH as a hedge here,” said analyst Crypto Birb as the drama was unfolding. Yesterday Crypto FOMO summed up ETH’s price action this week: “Ethereum is crashing a lot lesser than other cryptos, which is very bullish.”

Eth: Endgame

Creator Vitalik Buterin has celebrated the first birthday of Eth2’s Beacon Chain by releasing an updated roadmap diagram. It includes the merge (proof of stake), the surge (scalability and sharding) the verge (statelessness through Merkle trees) the purge (eliminating historical data and technical debt), and the splurge (miscellaneous stuff). In a separate post called ‘Endgame‘ he discussed plans to avoid centralisation and ensure censorship resistance. “It will likely take years for all of this to play out,” he wrote. “Sharding and data availability sampling are complex technologies to implement.”

‘Satoshi’ case verdict

Both sides are claiming a win in Bitcoin’s trial of the century. Satoshi claimant Craig Wright was ordered to pay US$100M (AU$142M) to the company he and Dave Kleiman founded after he was found liable for ‘conversion’ (basically appropriating the company). However, he was not found guilty of fraud or forced to hand over a single Bitcoin, which supporters say “exonerates” him.

Bits and pieces

The CEOs of Circle, FTX, Bitfury, Paxos, Stellar Development Foundation, and Coinbase will appear at a US Congress hearing into crypto on December 8. According to a Cabinet note, India won’t ban cryptocurrencies outright but will instead regulate the sector. Exchanges will come under the purview of the Securities and Exchange Board of India and citizens won’t be allowed to trade on foreign exchanges or keep their crypto in private wallets. It was a bad week for hacks and exploits, with BadgerDao losing US$120 million (AU$170M), MonoX losing around $31M (AU$44M), and centralised exchange Bitmart losing $196M (AU$278M). Jack Dorsey’s Square payments company is rebranding to Block, which suggests an increased focus on blockchain. Meta, the company formerly known as Facebook, is expanding eligibility requirements to run crypto ads on its social platforms. It now recognises 27 regulatory licenses, up from three previously.


Until next week, happy trading!